The following information is incorporated into the Prospectus, dated July
19, 1996 (the "Prospectus") and supersedes any inconsistent information
contained in the Prospectus.
On or about August 26, 1996, Specialized Health Products International,
Inc. (the "Company") entered into an exclusive distribution agreement (the
"Agreement") with Becton, Dickinson and Company ("BD") relating to the Company's
Safety Cradle sharps container products (the "Products"). The Agreement grants
BD an exclusive world-wide right to market and distribute the Products for an
initial term of three years, which term may be extended by BD annually
thereafter. The first sales pursuant to the Agreement are expected to occur in
the fourth quarter of 1996, after the Company has made several modifications to
the Products, which modifications are required by the Agreement. The Company
does not expect substantial sales of the Products prior to such time.
The Products may be sold, at BD's option, either under the Company's name
or under BD's label. The Products will, however, be imprinted with the Company's
name. The sales price of the Products to BD under the Agreement can be adjusted
under certain circumstances for changes in the initial term of the Agreement.
The Company is not required to distribute its future, unrelated products through
BD.
In addition to the matters discussed in Risk Factors in the Prospectus, the
Agreement presents certain additional risks to the Company. These include, among
other things (i) reliance for sale of the Products on BD, and therefore reliance
on BD's marketing ability, marketing plans and credit-worthiness; (ii) if the
Products are marketed under BD's label, goodwill associated with the Products
may inure to the benefit of BD rather than the Company; (iii) the Company has
only limited protection from changes in manufacturing costs (other than raw
materials costs) during the initial term of the Agreement; (iv) if the Company
is reliant on BD for all or substantially all of its sales, the Company may be
restricted in its ability to effectively negotiate with BD for renewal of the
Agreement.
The Company believes that sales of the Products will increase substantially
during the next year. If sales do not increase substantially, the Company will
need to raise additional funds through public or private financings. No
assurance can be given that additional financing will be available or that, if
available, it will be available on terms favorable to the Company or its
stockholders. If adequate funds are not available to satisfy short-term or
long-term capital requirements, the Company may be required to reduce
substantially, or eliminate certain areas of its product development activities,
limit its operations significantly, or otherwise modify its business strategy.
In addition to the foregoing, the selling securityholders table found at
page 47 of the Prospectus has changed due to a transfer of ownership by several
selling securityholders in transactions that were exempt from registration under
the Securities Act of 1933, as amended. Without altering the selling
securityholder table, except as explicitly set forth below, the following amends
the selling securityholders table with respect to the selling securityholders
specifically named below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percentage of Common Stock Underlying
Stock Owned as Stock Ownned Before Stock Offered Warrants and Stock
Name of June 11, 1996 Offering Hereby Options Offered Hereby
- ------------------------------- ----------------- -------- ------- ----------------------
Alpine Securities Corporation 50,000
Banyon Investment Company, LC 50,000
Capital Growth International 75,000 8% 938,040
Cartwright Holdings, Inc. 110,494
Genevalor Trusteeship 190,214 3% 190,214 210,000
Gail Healey 123,465 2% 123,465 39,841
Helix Investments Limited 1%
M.R. Lewinsohn 75,500 2% 75,500 195,000
Albert Maturo & Josephine Mauro Jt Ten 5,000
Chris Maturo 3,000
Daniel Nilsen 10,000
Mikal G. Nilsen 10,000
Perwick Holdings Limited 115,024
J. Clark Robinson, Trustee of the
Robinson Family Trust 50,000 1% 40,000 27,000
S.P. Angel Nominees 12,500 * 12,500 87,500
Lynette Small 5,000
Nils N. Trulsvik 142,500 2% 112,500 4,500
Stephen Walker 5,000
Thomas D. Walker 5,000
</TABLE>
This Prospectus Supplement is dated August 26, 1996.
